Market Sentiment And Overnight Summary

Bloomberg analyst TJ Marta summarizes market developments in the last few hours since the death of Kim Jong Il pushed risk aversion, especially in Asia to an extreme:

• Asia stocks fell, led by Korea’s KOSPI -3.4%, on uncertainty following Kim Jong Il’s death
• Most EU sovereign yield-to-bund spreads moderately tighter ahead of ECB’s 3-yr long-term refinancing operation on December 21 in which banks can borrow unlimited funds using sovereign bonds as collateral despite skepticism as EU finance ministers seek to meet self-imposed deadline for drawing additional aid to debt crisis; most EU stock indexes,
• U.S. futures modestly higher
• FX, commodities mixed; exceptions Chinese yuan +2.1 std. devs., 0.2%, after PBoC published rules allowing more overseas funds to be invested in domestic market; corn +2.2 std. devs., 2.7%, after China announced it will purchase in temporary stockpile to support prices

And BBG's James Holloway summarizes broader market sentiment and key events to keep an eye for:

• Treasury 10-yr yields holding near lowest levels since Oct. as investor confidence that comprehensive solution to EU debt crisis wanes.
• EU finance ministers to hold call to discuss €200b in additional funding through IMF, mechanics of the fiscal compact that was negotiated at Dec. 9 summit
  • LTRO is invitation to embrace carry trade, ease funding woes of euro zone, except that it probably won’t: SocGen
• Sarkozy’s appeal for lenders to take central bank money and buy government bonds will probably go unheeded on concern borrowing the money signals weakness and buying the debt will incur losses
• ECB’s Draghi damped expectations the bank will step up bond purchases to tame rising borrowing costs, telling the Financial Times in an interview published today that the bank can’t overstep its mandate
• Spanish yields fall amid speculation banks bought the debt to use as collateral when the ECB starts offering three-year loans tomorrow
• North Korea said its people and military back Kim Jong Un, the third son of Kim Jong Il, as leader; Kim Jong Il died Dec. 17 from a heart attack, the official Korean Central News Agency said today, ending a 17-year tenure in which North Korea built nuclear weapons while some 2m of its people died from famine
• Measures in the derivatives markets show traders expect the euro to fall further amid declining expectations in the ability of EU leaders to contain the debt crisis
• U.S. branches of foreign banks, struggling to tap American markets for short-term funding amid the European debt crisis, are using up their cash at the fastest pace since at least 2006 and seeking infusions of dollars from their home countries

Key events:

• 10:00am, NAHB Housing Market Index, Dec., est. 20 from 20
• 11:00am, Fed to purchase $4.25b-$5b notes in 12/31/2017 to 11/15/2019 range
• 11:30am, U.S. to sell $29b 3-month, $27b 6-month bills
• 12:30pm, Fed’s Lacker to speak in Charlotte, NC
• 1:00pm, U.S. to sell $35b 2-yr notes

Source: Bloomberg

Comments

[PY-129-20]

The new Kim in town just shot his first short-distance rocket in the sky.

SPIEGEL (Google Translated)

Original:

http://www.spiegel.de/politik/ausland/0,1518,804625,00.html

[mtremus]

he's nothing more than a PUPPET for the military regime

[tiger7905]

Some thoughts on North Korea and wikileaks background perspective.

http://goldandsilverlinings.com/?p=1790

[ThrivingAdmistC...]

Lets hope NK doesn't collapse in the next week, the economic fall out would be catastrophic.

[trampstamp]

Buckle up!

[Strut]

PPT comes into play very soon to save the day. BAC plummiting to $5.03 as I type this.

[lolmao500]

Where's the debt at?

[Peter K]

Forgot about the biggest event of all: The Greek debt redemption. 2.5b Euro pay out to the PSI should hit the accounts today. ;)

We will see:)

[Irish66]

I was hoping for a quiet day.

[transaccountin]

Majic future pump overnight I see. While I slept the magic pump started promptly at 1AM est time for no fking reason, no news.The euro barely budged, but yet we ran up 20 /es points, right ok sure.... .

[Captain Benny]

You're not the only one that noticed.  The futures ramp speaks volumes about the panic TPTB are in.  I think they're going to try to do one more squeeze attempt before a big flush out.  There is no way normal traders are buying into ES futures at that time in such volumes on no news.

[sbenard]

So the septagenarian devil we knew (Kim Jung Il) is now gone and the twenty-something devil (Kim Jun Sun) we DON'T is here, and that's a "risk on" moment?

This appears to be more evidence of an over-juiced faux market fueled by central bank insanity, than a genuine opportunity to buy value!